Study: The Carbon Emissions of Bitcoin From an Investor Perspective

Frankfurt am Main — November 16, 2021 — The Frankfurt School Blockchain Center (FSBC) and published a study outlining a new approach on how to offset the CO2 emissions caused by the Bitcoin network. The study outlines a two-pronged flexible carbon compensation model, in line with Greenhouse Gas Protocol Scope 3 emissions, for investors, asset managers, crypto exchanges, and custodians. With this approach, interested parties can adjust their carbon offset strategy over time according to their corresponding business model focusing on either the number of Bitcoins held or on the proportional network usage in relation to the Bitcoin blockchain growth during a specific period of time. — Authors: Prof. Dr. Philipp Sandner, Constantin Lichti, Robert Richter, Cedric Heidt, Benjamin Schaub

The study contains 34 pages and can be downloaded here (780 kB, direkt link to PDF).

Although it has only existed for less than 13 years, Bitcoin has had an eventful history. At the same time, however, climate change continues to become an ever-increasingly urgent issue. The CO2eq emissions associated with Bitcoin’s consensus mechanism, namely proof-of-work (PoW), have been one of the most significant criticisms of Bitcoin in recent years. Reconciling Bitcoin’s shortcomings and strengthening its role presents a significant opportunity to make Bitcoin a more sustainable investment.

​​Exemplary results refer to the analyzed period from September 1, 2020, to August 31, 2021. For an accurate calculation of the carbon footprint of an investor, the situation must be considered individually depending on the business approach of the company (i.e., simple investing, asset management, crypto exchanges, or custodians).

Key results of our study

  1. Bitcoin network electricity consumption: The maintenance of the worldwide Bitcoin network required 90.86 TWh and 37.97 MtCO2eq within the specified period. Electricity consumption should be viewed from a neutral perspective. What matters is the source of the electricity that is consumed. It is key to distinguish between renewable sources of electricity and fossil fuels. We do this by taking into account the total electricity mix of each country to convert Bitcoin’s electricity consumption into its carbon footprint.

While Bitcoin itself could hypothetically be mined with 100% renewable, carbon-neutral energy, this is not the case today as miners are incentivized purely to optimize their profitability by keeping their cost as low as possible. According to the “polluter-pays” principle, it would seem natural for CO2eq to be offset by mining companies or mining pools as they purchase generated electricity for their operations (Greenhouse Gas Protocol Scope 2 emissions). However, this assumption would be infeasible to implement and also falls short in fact. Since all parties that invest in Bitcoin, whether directly via crypto exchanges or indirectly through financial products such as Exchange Traded Notes (ETNs) or crypto funds, benefit from mining operations and, thus, ultimately from their power consumption.

Transaction-based approach

Therefore an approach is required which determines the proportional accountability for Bitcoin’s CO2eq footprint based on the utility stakeholders enjoy. Since Bitcoin mining has the function of adding new transactions to the blockchain, a quantifiable method is needed to calculate the CO2eq emissions of transactions. Therefore, the most accurate approach is determining the share of blockchain space used relative to the total Bitcoin blockchain growth (transaction-based network usage). Figure 1 below illustrates the methodology used in the transaction-based as well as ownership-based approach.

Figure 1: Two-Pronged Flexible Carbon Footprint Calculation Model

Ownership-based approach

However, this approach would generally exclude many parties who do not have access to their transaction-related data. Furthermore, as shown above, a significant portion of Bitcoin’s utility is derived from its long-term macroeconomic model; the store of value. For this situation, we suggest a calculation model which focuses on the portion of Bitcoins held relative to Bitcoins in circulation for a specific period (ownership-based network usage).

In this vein, we see an opportunity for all investors, asset managers, crypto exchanges, and custodians to step in, and take responsibility for their associated carbon footprint in the Bitcoin network. Here, the objective should not be limited to demonstrating corporate social responsibility (CSR) but also in creating added value in making Bitcoin a more sustainable investment regarding its carbon footprint.

Carbon Footprint Analysis: Applying the Bitcoin Carbon Neutrality Investment Standard to Iconic Funds Physical Bitcoin ETP (ISIN: DE000A3GK2N1) in collaboration with the Frankfurt School Blockchain Center is applying the Bitcoin Carbon Neutrality Investment Standard (BCNISTM) as presented above to assess the proportional carbon footprint for Iconic Funds Physical Bitcoin ETP (ISIN: DE000A3GK2N1) for Q2/2021.

Applying the transaction-based carbon footprint calculation model of the BCNISTM, the carbon emission was determined:

Calculated carbon emissions equivalent: 37.60 tCO2
(Observation period: April 15, 2021 — June 30, 2021)

BCNISTM: Calculation model for determining the carbon footprint of financial products that include Bitcoin in line with Greenhouse Gas Protocol Scope 3 emissions. More information on the methodology is available as part of this study. This approach allows investors, asset managers, crypto exchanges, and custodians to anticipate and comply with regulatory requirements concerning ESG criteria like the European Union’s Sustainable Finance Disclosure Regulation (SFDR) at an early stage.


Companies could apply the above-mentioned approaches for transactions and owning Bitcoins to compute their carbon footprint they then should offset. As mentioned above, the specific business model needs to be considered for such computations. In the future, it can be expected that the results of such computations will need to be verified and audited by specialized service providers.


The study contains 34 pages and can be downloaded here (780 kB, direkt link to PDF).

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Prof. Dr. Philipp Sandner has founded the Frankfurt School Blockchain Center (FSBC). From 2018 to 2021, he was ranked as one of the “top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. Further, he belonged to the “Top 40 under 40” — a ranking by the German business magazine Capital. Since 2017, he has been a member of the FinTech Council of the Federal Ministry of Finance in Germany. He is also on the Board of Directors of FiveT Fintech Fund, 21e6 Capital and Blockchain Founders Group — companies active in venture capital financing for blockchain startups and crypto asset management. The expertise of Prof. Sandner includes blockchain technology in general, crypto assets such as Bitcoin and Ethereum, decentralized finance (DeFi), the digital euro, tokenization of assets and rights and digital identity. You can contact him via mail (, via LinkedIn (, or follow him on Twitter (@philippsandner).

Constantin Lichti is a research associate and project manager at the Frankfurt School Blockchain Center, and doctoral candidate (PhD) at the Johannes Gutenberg University Mainz. His research interests include Bitcoin and public blockchain adoption, as well as how the discourse on blockchain technology is reflected in (social) media. He graduated from the Technical University of Munich with a master’s degree in industrial engineering and management. You can contact him via email ( and LinkedIn (

Cedric Heidt is a research assistant at the Frankfurt School Blockchain Center with a focus on decentralized governance, DeFi, and cryptocurrencies. You can contact him via email ( and LinkedIn (

Robert Richter, CFA is a research fellow at the Frankfurt School of Finance focussing on Decentralized Finance (DeFi). Robert began his career in the financial services sector in 2012 at Lloyds Banking Group and has worked at Deloitte UK and Deloitte Switzerland since. You can contact him via email ( and via LinkedIn (

Benjamin Schaub is a senior consultant at His interests include the development and integration of blockchain use cases in the financial industry as well as crypto custody. You can contact him via email ( and via LinkedIn (

About the Frankfurt School Blockchain Center

The Frankfurt School Blockchain Center is a think tank and research center which investigates implications of the blockchain technology, crypto assets and distributed ledger technology (DLT) for companies and their business models. Besides the development of prototypes, it serves as a platform for managers, startups, technology and industry experts to share knowledge and best practices. The Blockchain Center also provides new research impulses and develops trainings for students and executives. It focuses on banking, finance, mobility and, “Industrie 4.0”.

About is a blockchain consultancy founded by the Frankfurt School and Plutoneo Consulting and is specifically tailored to the needs of financial organizations. focuses on the integration and handling of digital assets and the strategic evaluation of blockchain deployment opportunities and their implementation.